Land financialisation and the financing of urban development in China

Abstract

There is a growing body of literature on China’s land reform, land system and land-centred urbanisation. While the contribution of land proceeds to Chinese local public finance and infrastructure investment has been widely acknowledged, few studies examine land through the perspective of financialisation, namely how land development uses financial instruments to generate development finance. The process of land-driven financialisation in China has not been well understood. This paper examines the land mortgage, which has accelerated since 2008, and subsequent waves of financialisation through local government financial vehicles (LGFVs) and Chengtou Bonds (urban construction and investment bonds). We highlight that the adoption of a fiscal stimulus package triggered land financialisation, which started as a development strategy for crisis management in China.